IPP Ormat Technologies has put an 80MW/320MWh BESS in California into commercial operation, and will now leverage the investment tax credit (ITC) for which it is eligible.
The 4-hour duration battery energy storage system (BESS) ‘Bottleneck’ project in California’s Central Valley will provide energy, capacity and ancillary services to one of the state’s three big investor-owned utilities, SDG&E, under a 15-year tolling agreement.
Ormat said the project is expected to be eligible for a 40% investment tax credit (ITC) and the company plans to monetise that by the end of the year.
The ITC for standalone energy storage was introduced under the US’ Inflation Reduction Act and can cover 30-70% of a project’s capital expenditure depending on how many criteria it hits. Energy-Storage.news interviewed tax credit specialist investment banking firm Foss & Company about tax credits and energy storage last week (Premium access).
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The commercial operation of Bottleneck brings Ormat’s operational capacity in the US to 270MW/638MWh and it is building another six with total capacity of 355MW/920MWh, with a 2028 goal to reach 950MW-1050MW/2.5GWh-2.9GWh of operational capacity.
That pipeline includes two projects in the ERCOT, Texas market for which it signed tolling agreements with optimiser Equilibrium Energy in August, totalling 240MWh of capacity coming online in Q4 2025. Tolling agreements, primarily Resource Adequacy (RA), are very common in California and less so in ERCOT, but the market is moving to them because of the financing options it opens up for projects.
California is the US’ leading market for BESS by some distance, with over 13GW online, thanks to high solar penetration, plentiful land and market mechanisms like RA helping capital flow into the sector.
